Journalof INTERDISCIPLINARY SOCIAL SCIENCES

The International JOURNALof INTERDISCIPLINARY SOCIAL SCIENCES Volume 4, Number 2 The Marketing of Legal but Potentially Harmful Products and Corporate Social Responsibility: The Gaming Industry View June Buchanan, Gregory Elliott and Lester W Johnson www.socialsciences-journal.com THE INTERNATIONAL JOURNAL OF INTERDISCIPLINARY SOCIAL SCIENCES http://www.SocialSciences-Journal.com First published in 2009 in Melbourne, Australia by Common Ground Publishing Pty Ltd www.CommonGroundPublishing.com. © 2009 (individual papers), the author(s) © 2009 (selection and editorial matter) Common Ground Authors are responsible for the accuracy of citations, quotations, diagrams, tables and maps. All rights reserved. Apart from fair use for the purposes of study, research, criticism or review as permitted under the Copyright Act (Australia), no part of this work may be reproduced without written permission from the publisher. For permissions and other inquiries, please contact <[email protected]>. ISSN: 1833-1882 Publisher Site: http://www.SocialSciences-Journal.com THE INTERNATIONAL JOURNAL OF INTERDISCIPLINARY SOCIAL SCIENCES is peer-reviewed, supported by rigorous processes of criterion-referenced article ranking and qualitative commentary, ensuring that only intellectual work of the greatest substance and highest significance is published. Typeset in Common Ground Markup Language using CGCreator multichannel typesetting system http://www.commongroundpublishing.com/software/ The Marketing of Legal but Potentially Harmful Products and Corporate Social Responsibility: The Gaming Industry View June Buchanan, Macquarie University, New South Wales, Australia Gregory Elliott, Macquarie University, New South Wales, Australia Lester W Johnson, The University of Melbourne, Victoria, Australia Abstract: A number of industries sell products (or services) such as tobacco, alcohol and gambling that, although legal, are considered potentially harmful to some members of society. Unlike other products that attract no attention when using strategies to increase market share, many of these potentially harmful products attract criticism from concerned members of society and often governments when their markets increase. Corporate scandals in recent times have led to greater calls for social responsibility to be embraced by all businesses, but the call is most pronounced towards organisations providing products that are detrimental to certain members of society. This paper investigates gaming industry perceptions of compliance with the precepts of corporate social responsibility (CSR) in the marketing of electronic gaming machines (EGMs). Thirty-eight face-to-face and/or telephone interviews were undertaken with EGM manufacturers, gaming consultants,managers of gaming establishments and casino operators in Nevada (USA) and New South Wales (Australia), along with management of the gaming regulatory authority in New South Wales (NSW). In spite of a much tighter regulatory environment in NSW, it was found that the major gaming operators in Nevada appear to be aware of, and practice, CSR to a noticeably greater extent than do gaming operators in NSW. Notwithstanding this however, EGM operators both in Nevada and NSW need to implement socially responsible marketing strategies and tactics to a significantly higher degree than is currently practiced in order to enhance their reputation, decrease criticism from key stakeholders and minimise the potential threat of increased regulatory constraints. Keywords: Corporate Social Responsibility (CSR) Marketing, Potentially Harmful Products, Gaming, Electronic Gaming Machines (EGMs) Introduction ARKETING MANAGERS ARE responsible for increasing profits through customer satisfaction as a result of offering quality products at the right price, in Mthe right place, providing pertinent information and, in the case of services, in an appealing environment (also referred to as the ‘servicescape’). When these products are legal but potentially harmful however, that is often accompanied by criticism from the community, government and other concerned stakeholders, particularly when company profits rise. Increased pressure on all organisations to operate in a socially responsible manner has arisen during the past ten years as a result of such infamous operations as Enron, Tyco, WorldCom and Parmalat. It is even more important, therefore, for industries that market legal but potentially harmful products to adopt socially responsible processes The International Journal of Interdisciplinary Social Sciences Volume 4, Number 2, 2009, http://www.SocialSciences-Journal.com, ISSN 1833-1882 © Common Ground, June Buchanan, Gregory Elliott, Lester W Johnson, All Rights Reserved, Permissions: [email protected] THE INTERNATIONAL JOURNAL OF INTERDISCIPLINARY SOCIAL SCIENCES and practices that go beyond legal requirements only. These respective organisations need to be seen to be genuinely responsible rather than using corporate social responsibility (CSR) for the purposes of public relations (PR) or window dressing. Well-documented evidence on the potentially harmful effects of tobacco, alcohol and gaming products, raises the question of: “why are they legal?”. One could argue that, in ad- dition to the substantial fiscal contribution these industries make to government coffers, cultural factors also play a part. Australia for example has traditionally been a nation where ‘a drink, a smoke and a bet’ is part of the national psyche. Although over-consumption of any of these products invariably results in harmful effects, Doughney (2007a) argues that the gaming industry is less ethical than the tobacco industry because the victims of the former can be more readily identified. The purpose of this paper is to extend the predominant focus on the tobacco and alcohol industries to consider another potentially harmful product, namely electronic gaming machines (EGMs), from within the gaming industry itself. Although there is a substantial body of research into EGMs, this paper will specifically examine the views of the gaming industry in terms of EGMs, marketing and CSR. Increasing concern exists about the negative social costs associated with those who over- indulge and over-spend their own budgetary limitations as a result of becoming addicted to playing EGMs. Although Australia has only 0.3 per cent of the world’s population (and almost 14.5 million adults aged 18 and over (ABS 2008) - the legal age for gambling in Australia), it has more than 20 per cent of the world’s ‘high intensity gaming machines’ (Productivity Commission 1999), increasingly referred to as EGMs but also known colloquially as ‘pokies’ in Australia and ‘slots’ or ‘video poker machines’ in the USA. New South Wales (NSW) has half the number of EGMs in Australia and “has the highest number of gaming machines per 10,000 people anywhere – including Las Vegas” (Miserable Odds, 13 February 2006, p.22). Recent figures (Australian Gambling Statistics 2006) show that total Australian gambling turnover for 2005-06 was almost $108 billion (with NSW at almost $57 billion). Gambling expenditure (gamblers losses) was more than $10 billion for Australia and $5 billion for NSW. Australia has 200,850 gaming machines, of which NSW has 100,034 (Australian Gambling Statistics 2006). Star City is the only legal casino in NSW and has 1,500 EGMs. Other EGMs are in NSW registered clubs and ‘pubs’. Much negative perception exists regarding not only access issues and the high prevalence of EGMs in Australia, but also controversies regarding their placement in low socio-economic areas where customers can least afford it (Doughney 2007b; McMillen et al. 2004; Marshall and Baker 2002; Mellor 2005). Others (Livingstone and Woolley 2007) criticise the lack of effective legislation in protecting problem and at risk gamblers and accuse the government and the gaming industry of being collaborators in the obfuscating, rhetorical discourse of ‘business as usual’. Given the negative perception of EGMs by many in Australian society and the increased interest in CSR globally (see for example de Bakker et al. 2005), the focus of this research is on the question: ‘to what extent do operators of EGMs consider that they incorporate CSR into their marketing strategies?’. Accordingly the perspective in this paper is on how gaming operators view themselves in terms of being socially responsible, as opposed to the identified existing literature that predominantly looks from the ‘outside in’. 82 JUNE BUCHANAN, GREGORY ELLIOTT, LESTER W JOHNSON Corporate Social Responsibility (CSR) Definition Widespread consensus that the concept of CSR is fraught with a multitude of terms and definitions appears to exist (Aupperle et al. 1985; Campbell 2007; Carroll 1998; de Bakker et al. 2005; Lantos 2001; McWilliams et al. 2006; Valor 2005). Some feel that this should not be an impediment however, with Dahlsrud (2006) stating that, although there is still confusion about how CSR should be defined, the existing definitions “are to a large degree congruent” (p. 1). Further, he considers that it is not the lack of a universally accepted definition so much as it is “about how CSR is socially constructed in a specific context” (ibid). Nevertheless, others consider the many “paradoxes inherent in the phrase ‘corporate social responsibility’” and that, “until these paradoxes are properly addressed, corporate social responsibility can legitimately be branded an invention of PR” (Frankental 2001, p.18;

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